Friday August 7 Housing and Economic stories

TOP STORIES:

Traders Burned by Graft Scandal Now Singed by Brazil Bank Probe - (www.bloomberg.com) Bond investors in Brazil just can’t catch a break. After being burned by a bribery scandal at the country’s state-owned oil company, they were buffeted again last week when federal prosecutors probing Brazil’s national development bank said the lender lost out an estimated $2 billion by setting interest rates too low for risky borrowers. The bank’s $1.75 billion in notes due 2023 have now suffered their biggest-ever weekly rout, losing 4.2 percent. The report followed two other investigations announced this month. The allegations against BNDES, as the bank is known, come after it ratcheted up lending to $201.4 billion to power Latin America’s biggest economy, eclipsing the World Bank. Prosecutors said Wednesday the estimated losses are tied to $12 billion of loans, more than two-thirds of which financed projects from Angola to Venezuela by a Brazilian builder also implicated in the graft investigation into oil producer Petroleo Brasileiro SA.

Yanis Varoufakis Revealed Secret Plans for Parallel Greek Payment System in Recorded Phone Call - (www.bloomberg.com) Former Greek Finance Minister Yanis Varoufakis said he was authorized by the country’s prime minister, Alexis Tsipras, to come up with an emergency plan for a parallel payment system, which could lead the country to the drachma, according to a recording of a call with investors released today. Varoufakis spoke to the investors on July 16, 10 days after he resigned. The recording was released with his approval and in the interest of transparency, according to the Official Monetary and Financial Institutions Forum, which describes itself as an independent platform for dialogue. Details were first reported by Kathimerini newspaper on Sunday. “We were planning to create, surreptitiously, reserve accounts attached to every tax file number, without telling anyone, just to have this system in a function under wraps,” Varoufakis said in the recording.

Global Growth Worries Pummel Commodities  - (online.wsj.com)  Investors are bailing on commodities amid mounting worries about the pace of global growth. New data showing China’s factory activity hit a 15-month low and a leaked Federal Reserve memo betraying concerns about how fast the U.S. is growing added to concerns Friday and accelerated the selloff of commodities—from oil to gold to copper. Money managers reduced bets on higher oil prices to their lowest level in 2½ years, while ramping up bets on lower copper prices to their most bearish in two years, according to weekly data from the Commodity Futures Trading Commission. Money managers also turned net-bearish on gold futures and options this past week for the first time ever in data going back to 2006. “There is a confluence of negative factors that have created a cloud of uncertainty and doubt,” said Michael Turek, head of base metals at BGC Partners. “Investors are thinking that commodities are not the place to be.” On Friday, copper and silver, both used in electronics, sank to six-year lows. Gold fell to a five-year low, and U.S. oil prices pushed further below $50 a barrel. The S&P GSCI, an index tracking a broad basket of commodities, fell to 3866, the lowest since January.

These 10 States Will Be Hurting the Most After the Commodities Meltdown - (www.bloomberg.com)  In the brutal commodities meltdown, all U.S. states are not created equal. In fact, the impact has been vastly different. The Bloomberg Commodity Index last week reached a 13-year low and has plunged 61 percent since its peak in 2008. That matters a lot in, say, Wyoming, Louisiana, Texas and Nebraska. Not so much in New Jersey or Massachusetts, for example. The map below shows the top 10 states with the greatest exposure as measured by mining and agriculture's share of the economy in 2014. The darker the color, the more the state's economy is at risk.  Wyoming is home to most of the top producing coal mines in the U.S. Its mining and agriculture industries generated 36 percent of its economic output in 2014, more than any other state, according to Moody's Analytics's calculations using Commerce Department data. 

Oil groups have shelved $200bn in new projects as low prices bite – (www.ft.com) The world’s big energy groups have shelved $200bn of spending on new projects in an urgent round of cost-cutting aimed at protecting investors’ dividends as the oil price slumps for a second time this year. The sell-off in oil has been matched by a broader slump in copper, gold and other raw materials, pushing the Bloomberg commodities index to a six-year low over concerns of weaker Chinese growth and rising supplies across the board. The plunge in crude prices since last summer has resulted in the deferral of 46 big oil and gas projects with 20bn barrels of oil equivalent in reserves — more than Mexico’s entire proven holdings — according to consultancy Wood Mackenzie.

OTHER STORIES:

Greek PM Tsipras under pressure over covert Syriza drachma plan reports - (www.reuters.com)
Greek Stock Market Will Stay Closed on Monday, Might Reopen Tuesday: Official Sources - (www.reuters.com)
Dubai Stocks Lead Mideast Declines as Oil Slump Clouds Outlook - (www.bloomberg.com)
Debt conundrum to keep Greek banks in months-long freeze - (www.reuters.com)
Greece Awaits Troika’s Return As August ECB Payment Looms - (www.bloomberg.com)

Minister: Greek bailout talks format still being negotiated - (news.yahoo.com)
Puerto Rico should worry bond investors - (www.businessinsider.com)
Heightened Tensions in Turkey After Strikes on Kurdish Militants in Iraq - (www.nytimes.com)
Turkey car bomb kills two soldiers as PKK truce breaks down - (www.bbc.com)
Houthis, Saudi-led forces battle for Yemen's biggest air base - (www.reuters.com)